269. Memorandum From William H. Brubeck of the National Security Council Staff to President Kennedy0
SUBJECT
- Guinea Aid Program
Ambassador Loeb reported this morning Toure’s unhappiness over the US aid program in Guinea but, in a telegram later today (attached),1 indicated that the issue is being resolved. The major problem, as Loeb says, is educating Toure.
Toure’s unhappiness reflected primarily his confusing counterpart (local currency generated by dollar financed commodity imports) and PL 480-generated local currency. Contrary to his belief, counterpart (about $5 million per year in Guinea francs) is totally available to the Guinea Government for development purposes and this should satisfy Toure, when explained. The restrictions Toure complained about apply instead to PL 480 local currency. It is US-owned with 51% available to the Government of Guinea in loans that are virtually grants (40 year—3/4%); 25% for private industry loans, and 24% for US Government use (Embassy expenses, etc.). PL 480 to date is about $20 million.
In any event, the main point of Toure’s complaint—that local currency should go for development projects and not for technical assist-ance—can and will be satisfied. The key point is simply to make him understand a set of facts which he will find generally agreeable.
More important is the situation behind Toure’s complaint. Guinea is in desperate economic shape and, for the first time Toure is concentrating with some realism on his economic problems. He wants the largest amount of visible, “meat and potatoes” development projects, particularly to stem the political unrest. To this end he is trying to make peace with the French, improve the climate for private investment, and to control spending. He is putting together an ambitious and probably impractical new economic development plan and is tentatively sending a mission over here to talk about increased aid the beginning of December. Our problem is to keep our aid commitment down to sensible limits without Toure getting so disillusioned he turns back to the Bloc.
Ambassador Loeb is coming back this month for consultation and AID and State are working on the problem. I am following this closely and when we reach the point of difficult decision I believe you may want to consider it.